Indian stock markets commenced the week on a disheartened note, witnessing substantial drops in both the Sensex and Nifty indices, as investors grappled with burgeoning international and domestic challenges. The BSE Sensex plummeted by 929.74 points, reinforcing concerns over an escalating crisis in the Middle East and apprehensions stemming from broader global market trends.
Market analysts were quick to point out the conjunction of factors that contributed to the bearish sentiment pervading Monday’s early trade. Among these, foreign fund outflows featured prominently, alongside unsettling inflation figures emerging from the United States, which exceeded market forecasts and added fuel to investor qualms.
Continuing its downward trajectory from the previous session, the 30-share BSE Sensex registered a significant loss, diving to 73,315.16, while its NSE counterpart, the Nifty, didn’t fare much better, declining by 216.9 points to a value of 22,302.50.
Taking a granular look at the Sensex basket, a slew of blue-chip companies bore the brunt of the massive sell-off. Companies such as Tata Motors, State Bank of India, Tata Steel, Power Grid, NTPC, Bajaj Finserv, Bajaj Finance, and Asian Paints were among the major laggards that saw their stock prices erode substantially.
Conversely, Tata Consultancy Services (TCS) provided a glimmer of resilience amidst the broader market downfall, with its shares showing an uptick of nearly 1 percent. This increment came in the aftermath of the IT giant’s disclosure of a 9 percent surge in net profit for the January-March quarter of the financial year 2024, attributed largely to a strong domestic business environment even as it encountered headwinds in numerous overseas markets.
Also bucking the trend were Nestle and HCL Technologies, which entered the roster of gainers, albeit on a day marked by overarching negativity.
A quick survey of the international stock markets revealed a mixed picture in Asia. Cities like Seoul, Tokyo, and Hong Kong experienced downturns in their respective markets, whereas Shanghai eked out gains and stood in positive territory. The preceding session on Wall Street had concluded with considerable losses, setting a somber tone that seemed to resonate across global markets.
The ripples of disquiet were felt in the commodities market, exemplified by a marginal dip in the global oil benchmark, Brent crude, which shed 0.17 percent to trade at USD 90.30 a barrel.
Adding to the confluence of bearish indicators, Foreign Institutional Investors (FIIs) were reported to have jettisoned Indian equities worth a staggering Rs 8,027 crore on the preceding Friday, as per exchange data.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, underlined a number of headwinds that burdened the markets, citing the revived conflict in the Middle East and proposed modifications to the India-Mauritius tax treaty, in addition to the startling U.S. inflation data. However, he suggested that some of these negatives may have been anticipated, given the expected counteraction from Iran and the precursory inflation fears that the markets had already priced in the preceding Friday.
In a parallel development, India’s Income Tax Department clarified that the amended India-Mauritius protocol aimed at preventing double taxation avoidance agreement (DTAA) abuses was still pending ratification and notification. The revised DTAA, which includes a principal purpose test (PPT), is designed to curb tax evasion by ensuring that treaty benefits accrue only in relation to transactions with legitimate objectives.
The market setbacks extended beyond the session’s losses, with the BSE benchmark having reeled from a 793.25-point drop (1.06 percent) to settle at 74,244.90 on Friday. Concurrently, the NSE Nifty reflected a similar bearish trend by winding down 234.40 points (1.03 percent) to close at 22,519.40.
Nonetheless, a ray of optimism shone through India’s macroeconomic data, with retail inflation receding to a five-month nadir of 4.85 percent in March, largely buoyed by subsiding food prices, thus inching closer to the Reserve Bank of India’s targeted 4 percent, according to statistics released last Friday. Moreover, India’s industrial production growth briskly advanced to a four-month high of 5.7 percent in February 2024, with the mining sector receiving accolades for its sterling performance.
Investors are now tracking these mixed cues, juxtaposing the grim trading moods against more optimistic long-term economic indicators, as they navigate through the uncertain terrains of financial markets in these turbulent times.
